Experts say bungle was avoidable

Systems outages are nothing new for banks, but analysts and specialists say there are hard lessons to be learned from NAB’s experience.

University of Sydney transactions expert, professor Alan Fekete, said that while there were always operational risks, they should not be able to “cripple a company’s entire transaction system".

“In this case the system stopped operating when a file became corrupted, suggesting an oversight in the design of the wider IT systems," Professor Fekete said.

Intelligent Business Research Services analyst Jorn Bettin said that “the quality of operational data in large banks was in a fairly poor state".

“Old legacy is being replaced by new legacy, and the problem is by no means limited to NAB or to Australia," Mr Bettin said.

“This leads to archaeological layers of software that are impossible to understand. The result is a situation where no one in the organisation understands the functionality of the legacy systems."

One solution applied in Britain to the issue of old computer systems that process in overnight batches has been to upgrade the payment networks to instant or real-time processing. While Commonwealth Bank of Australia and NAB have indicated they will adopt such systems, a regulatory source said the British experience showed system mistakes were propagated quicker and were harder to stop when running.